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EU Carbon Prices Hit Record High Following COP26

by Olivia Lai Europe Nov 16th 20212 mins
EU Carbon Prices Hit Record High Following COP26

Carbon prices in the EU have more than doubled the level at the start of 2021 in the wake of the UN climate conference as it becomes more widely accepted as a tool to decarbonise. 

What is Happening? 

European carbon permits have climbed to a record high following the conclusion of the two-week long COP26 UN climate summit in Glasgow, where nearly 200 nations agreed to reduce the use of fossil fuels. 

Carbon prices in the EU have reportedly risen as much as 5.9% to a record €66.97 (USD$76.25) a tonne, which is more than double the level at the beginning of the year. Current prices are also up from €55 a tonne just a month ago.

The record high numbers come straight after COP26 finally set out rules for a global carbon market, making polluting countries and companies pay for carbon permits and allowing them to trade carbon offset credits. Carbon markets are key to cutting carbon emissions in Europe, and encouraging new investments in clean and green technology such as carbon capture and storage and green hydrogen in developing countries. 

The adoption of the Glasgow Climate Pact at the end of COP26 will see bilateral deals take place in a UN-supervised marketplace. The EU also plans to extend the bloc’s trading scheme to more sectors, as well as implementing its ambitious carbon border adjustment mechanism, a tax on carbon emissions attributed to imported goods that have not been carbon-taxed at source.

The rise of carbon permits is also reflective of the surge of natural gas prices, which has recently made coal more competitive again. For countries to “phase down” coal – as agreed in the Glasgow Climate Pact – carbon permits would make burning coal more expensive and less attractive to investors in the long run. 

“While the outcome [from COP] wasn’t perhaps as strong as some had hoped there was still a clear signal that policymakers need to get serious about carbon pricing if we’re going to see emissions fall,” Mark Lewis of the Andurand Capital hedge fund said to the Financial Times

“There is a general feeling that carbon markets come out of the COP process reinforced,” Lewis continues, “as what has become clear is there’s now an acceptance among policymakers that the limited amount of space left for carbon in the atmosphere is the scarcest resource of all.”

You might also like: Carbon Tax: A Shared Global Responsibility For Carbon Emissions


About the Author

Olivia Lai

Olivia is a journalist and editor based in Hong Kong with previous experience covering politics, art and culture. She is passionate about wildlife and ocean conservation, with a keen interest in climate diplomacy. She’s also a graduate of University of Edinburgh in International Relations with a Master’s degree from The University of Hong Kong in Journalism. Olivia was the former Managing Editor at Earth.Org.

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